Telkom CEO Says Discussions Continue With Suitors

JOHANNESBURG -(Dow Jones)- Telkom SA is still in discussions with two suitors, one interested in buying some of its interest in mobile operator Vodacom Group and the other in buying Telkom but not its stake in Vodacom, the South African company's chief executive said Monday.

"Discussions are taking place to obtain clarifications," Chief Executive Reuben September said during a presentation following the release of Telkom's annual results. "The board and management are evaluating the proposals."

Telkom early last week said it had received a non-binding offer from partner Vodafone Group for some of its 50% stake in Vodacom, conditional on it spinning off the remaining interest in the mobile venture to shareholders. Vodafone already owns 50% of Vodacom, which is South Africa's largest mobile network operator by subscribers.

The discussions are "still at a non-firm stage," September said.

Telkom has also separately received a letter from a consortium of privately held Mvelaphanda Holdings, New York-listed Och-Ziff Capital Management LLC (OZM) and other strategic backers interested in making an offer for all of Telkom, conditional on it spinning off its entire stake in Vodacom.

Telkom's profit attributable to shareholders declined in the year to March 31 to 7.98 billion rand ($1 billion) from ZAR8.65 billion the year before. Revenue for the year was up 9% at ZAR56.87 billion, which Telkom said reflected growth of just 0.7% in its fixed-line business but 17% in mobile.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, were up 4.2% for the year at ZAR20.6 billion, but the company's Ebitda margin narrowed to 36.6% from 38.3% a year earlier due to flat revenue in fixed-line operations. Telkom said its fixed-line operating expenses rose on the back of increased employee expenses, payments to other operators and other costs.

(END) Dow Jones Newswires

Posted to the site on 9th June 2008